Tag Archives: eurozone debt

2 Cents Worth On Life Its Ownself

We offer fodder for the bored and aimless mind, at bargain prices…..

Twenty odd years ago when Greece was applying for and finally admitted to the Eurozone they demanded and received a special “bailout” as their price to vote for the admission of Portugal.  They didn’t transfer to the Euro until about 10 years ago and now are on the brink of financial collapse and demanding more bailout from others.  A quote just this week from a “man on the street” in Athens pretty well sums up their problem and their attitude.  He said that all they needed to do was take the money from the rich people and everything would be fine. Of course that money would last less than a year with their public employee payrolls and pension benefits.  After that what is their next plan–to take the money from the rich in other European countries?   Good luck with that.

Do you recall what the public welfare plan was for Jamestown when it was first established?   Some of those earlier settlers didn’t want to work the fields, build the cabins and hunt for food and provide for defence.   The welfare program was pretty simple–you don’t work you don’t get to share in the food or housing.  Only those physically unable were exempt and the community provided charity but not as a government requirement.  They had a rough go of it for a couple of years but the Tidewater area of Virginia continued to grow over the years from 1609 onward until Virginia was the most populous of the Colonies.

I am going to start throwing my shoe at the TV if the commentators and pundits don’t quit using the phrase “same exact” or its more elegant version “exact same”.  Darn, doesn’t anyone at those places know how to use proper English and syntax.   Could there possibly be a more redundant phrase.   One word or the other will be quite sufficient.

Some expert continue to predict that China growth will be the engine for global economic expansion and help raise the US economy.  You might want to check the Baltic Dry Index for the last few months.  The Chinese have significantly reduced steel production, they have slowed their shipments or iron ore and coal and have even delayed or simply defaulted on a number of such shipments.  They don’t apparently plan on building nearly as much at least in the near term and thus that growth will be a pretty small engine of world growth.  Everyone best re-think that strategy.   It doesn’t hurt to remember that the Chinese economy is there for the pleasure and amusement and benefit of the Communist Party.  They still have a tight rein on that country.  If you don’t believe me, ask Bo.

Are you surprised that a member of the NLRB appointed by a Democrat just resigned and took the position as general counsel for the AFL-CIO?   One can only guess what side he was on in every issue brought before that bureaucratic board.  

Geithner says that raising questions and concerns about increasing, again, the National Debt cause people to doubt the full faith and credit of the US and its  ability to pay its bills.   I believe that that is exactly why the question should be raised and that the National Debt must be controlled immediately–so we WILL be able to pay our debts on time.  If if keeps going up there is a limit to how much our creditors will advance.  The Fed has been buying over 60% of all our new debt and the others are bound to be getting nervous.   I just wish for once the Democrats would agree that there has to be a limit on its size.  I mean can it go to 35 trillion, 50 trillion?  Surely any rational mind would agree that the sky is NOT the limit.   The current budget proposals of BO already project the Debt to almost hit 30 trillion within a decade.   If not now, when are we going to address this problem.   Cut just 1 %, a measly 1% of the actual expenditures, not projected growth rate increases, across the board and it could balance out over a few years.

Gold and the Gold standard has many critics.  They claim it has no inherent value; that it does not represent a storehouse of value.  They believe the fiat currency  is the modern world and the only way to advance and manage  a modern economy.  Certainly not all but many economists tout this approach.  But, but, but, what causes me pause is that the fact that numerous central banks around the world have been accumulating gold for the last couple of years and continue to do so even as we speak.  Those central banks are run by the same economists and left-wing politicos who denounce gold.   Do actions speak louder than words.

Well, did you get rich and retire on your Facebook stock?  Never have understood why there is much money in teenage girls talking about Fluffy their cat and their new hairstyle or clothes purchase, except other teenage girls.    No matter how many gazillion users it may have it seems from a business standpoint that it is now at least a niche market with limited upside.   But what do I know, if you think it is great then bet the farm on it.  But I would recommend if you do,  that you sharpen your other job skills and learn to like living in an efficiency apartment.

One can only laugh at the outer limits of political correctness in vogue today.  The other day on a NPR show a caller to a scientist suggested that Black holes should be called “gravity holes” to eliminate negative connotations.  Well, even on NPR the scientist was taken aback a bit.  Firstly we could note that they are called Black holes because no light can escape from them and thus they are black.  That is why they are harder to discern by astronomers.  Where is Alice, this must be Wonderland.

“I have noticed that nothing I never said ever did me any harm.”  Calvin Coolidge www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownself

Rummaging around the corners of the mental attic we came across a few thoughts that only needed to be dusted off.  Maybe you’ll find  them worthy of a moment’s reflection or at least amusement.

It seems the European leaders are very good at having meetings and making announcements about plans to stabilize their Euro.  But have you noticed that the follow-up is pretty weak.  It seems so many of the deals never get actually implemented.  I mean there was a “deal” for the Greek debt about three months ago but no real money has changed hands and the Greeks haven’t yet satisfied the new loan terms.  Same is true with the alleged fund to back up the European banks and nations from almost a year ago.  The money hasn’t hit the table yet.  They seem to be good at having press conferences but not good at the follow-up execution of their plans.  I suppose Nero is their example.  After all Rome was eventually re-built.

Speaking of Greece, it is interesting that it is the private lenders, bondholders, of Greece that are having to take the 50% haircut. The various European governments and their central banks aren’t taking any loss on their bonds.  Makes one wonder exactly who in the future will be willing to loan to the Greeks.  It will probably be the European governments by hitting their taxpayers.  At least as long as those taxpayers believe the cost is worth it to keep the peripheral countries in the Eurozone.  The French and Germans may well decide it isn’t worth it.  Hmm, wonder is some day most of US citizens will feel the same way about California, Illinois and New York.  Why is it again we need to send a disproportionate amount of our tax money to those States while they never rein in their budgets?

I haven’t heard Tim Tebow ever say he believed the Lord gave him or his team a victory contrary to many news reports.   All I ever heard him say was that he thanked the Lord for a victory–quite a difference.

If you ever doubt the importance of the rule of law and the importance of which law applies then take a look at the Greek loan negotiations.  One of the requirements of the European banks and IMF is that English law applies to the new loans, not Greek.  Consistency and fairness regarding dealings among citizens in their private affairs and between citizens and their government are very important and our Anglo-Saxon common law is the best yet.  Far better than the many alternatives over the years tried by others. It is recognized even by those hostile to any vestige of English culture or heritage.

With the ongoing debates about the total US debt and the US tax code, we still like the idea promoted here before of making the Feds give a complete line item of the expense categories of the Federal budget on the back of your tax return.  Then you could check which programs you were willing to support and pay for.  The list would have military, HUD, welfare, EPA, etc.  Those that are real greenies could devote all their taxes to the EPA and those that don’t like it wouldn’t give it a dime for example.   Same with the military and all areas of government expenditures.  Its our money after all and I can’t think of a good reason why we shouldn’t have more input into how it is spent.  

During the political season (of course these day’s when does that season ever stop) it would be good if the politicos and the pundits would recall some sound advice from long ago.  When the government and its laws become too large and cumbersome then the politicians running that government are much more inclined to submit to the seduction of interest or resentment.  It seems BO in particular is into the resentment game and the interest game.  Why is it good for the body politic to have one large segment of the population resenting another large segment?  It would seem that is the perfect formula for extreme discord and eventually dis-union.  After all why expect one interest group to want to work with an0ther that they resent?  That resentment appeal is indeed a seduction and like all seductions a dangerous game to play.

In a society where the goal is equality of outcome,  history would unfortunately teach us that all that will produce is equality of servitude.   To achieve that equality of outcome always requires the blunt force of punitive measures by the government in charge.   There are no exceptions to that.  Why do you think Obamacare has criminal sanctions for those who don’t follow its mandate?  If you don’t report on the IRS forms correctly your insurance you will be guilty of filing a false document with Feds.  Don’t take my word for it, look it up for yourself; that is if you can find it in the gazillion criminal laws on the Federal books. 

What are the Scots thinking?  Do they really believe they will be better off as an independent country?    They are a great people with a proud history even if a turbulent one over the centuries.  Even the Romans find them so difficult to deal with they built Hadrian’s Wall at the border.  Whatever their cultural disputes with the English they will be worse off on their on.  They and their English brethren have survived many a hardship together and they have collectively advanced themselves immensely over the years.   They should think long and hard about what they will lose if they go it alone.  There will be no more pounds flowing from Whitehall to the north and I am not sure the world is beating at their door to buy Scottish goods and services. 

We have too many federal laws especially when you include all the regulations of our various agencies and bureaus of government; there are literally millions of them.  We need less laws and not more to fix our economic affairs.  I love the old Roman approach to new laws.  In the days before the Caesars the proponent of any new law would go before the assembly to offer it with a rope around his neck.  If the law wasn’t approved the innovator was instantly strangled with his own rope.  That would sure make politicos think a bit before they shot off their mouth about some new proposal.  Boy, makes you nostalgic for the old days.  www.olcranky.wordpress.com

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North-South And Secession

Nope this isn’t an analysis of the War Between the States in the US.  Although that war and its causes and aftermath might offer some useful guideposts for our friends across the pond.  Let’s talk about the current conflicts and disagreements among the Eurozone countries and their current dilemma in working out a solution to the disparity between the countries who follow a relatively frugal approach to their fiscal policies and those that have a much more laizzez faire attitude about the seemingly endless flow of funds from government to support their lifestyle.

You have read accurately that there is a divide already existing between the countries of the Eurozone on a North-South axis.  Those to the North are generally in much better shape than their neighbors to the South.  The southern edge of Europe covers Greece, the Balkan countries, Italy, Spain and Portugal.   Of course Ireland and Iceland have had their difficulties but those appear on the mend and their debt problems were small compared to the avalanche of debt bursting out of the southern countries now.  Those are the areas of immediate and longer lasting concern to the Eurozone nations because of their debt loads relative to their ability to service those debts even at the still historically low interest rates for their soverign bonds.   Do you think it is mere coincidence that the northern tier of countries are in better shape than their southern neighbors?

For several centuries this divide has been true.  In Roman times it was different and it was still true that the South was dominanat during the Medieval period but those days are longs gone.  Italy as a single entity has only been around about 150 years.  It as a nation is younger than the US.  Before Garibaldi it was a hodge-podge of principalties and city-states going back to the Dark Ages.   All of Europe follows essentially the same welfare-state philosophy but by culture and tradition the northern tier has been more industrious and hard working than their sourthern counterparts.  Blame it on geography or climate or any other factor you wish but those are the facts.   The Southern group likes to bask in the sun a bit more and expects more from the government and other people’s money.  The northerners are inclined to be more independent and self-sufficient and even though they do have welfare states they have over the decades limited to reach of the government share of their economy and culture.  This barrier became most clear with the advent of Thathcher in Great Britain.   But then other more “conservative” governments and attitudes slowly infused the body politic in Europe in the North anyway.

The Eurozone itself was a creature from the leaders of the Northern tier of countries.  All the southern countries were an after thought.  France, the Benelux countries and Germany were the original backbone and still are of the Eurozone.  The bulk of the rest of the economic strength still comes from the North with Finland, Sweden, the Danes and even Great Britain even though it is not part of the Eurozone currency system but it is a vital member of the Euro community.

Just as we had our divide and war between north and south it is nor beyond the pale that the North and South in Europe will likewise break and there will be secession talk.  In fact there has already been secession talk but it isn’t called that.  Italy is a good examplar of this situation.  It also is divided along north/south communities.   The south of Italy has since its inception been the economic drag on Italy.  It produces at best around 30% of GDP but receives more than 60% of government largesse.  The north is more urban and industrial and has been for a long time.  The people there are the worker bees and the southerners are the beneficiaries of politicians payoffs in exchange for votes. (sound familiar?)   In fact this discontent became so intense that it resulted in the formation of the Norther League.  That political movement was and is centered in the major northern  industial cities of Italy.  There was and still is talk of breaking the country into two parts, separating the North from the South.  This polical party was the base that led to the victories of Berlusconi of recent note.  The political rise of the Northern League was not so much about taxes, policy or the welfare state; it was about not having to carry the South anymore on their backs.  They believed the South didn’t fairly contribute their fair share to the economy and that they took out far more than they put into the hopper.  Those are indeed the facts.  The South of Italy was getting a free ride on the backs of others and spending other people’s money.  The government built “infrastructure” projects with alacrity and assured the North this would benefit everyone.  But after several decades of this p0licy the facts on the ground haven’t changed.   The South is still a drag on the nation.

Much of the current debt of Italy has been accrued due to the enomous sums it has expended in the South for these projects.   If you read the back pages and follow some of the foreign news sources you will note these complaints of the North.  The same complaints have application generally to the northern tier of Eurozone countries.   Brussells has been spending far more money in the “underdeveloped” southern tier of countries and many in the northern areas feel that they are being short-changed.   Who knows if Italy will divide at some point but the odds are surely much higher that the Northern tier of the Eurozone will decide at some point in the near future that the cost of including the southern tier of countries is not worth the candle.   There won’t be a war but intense and bitter acrimony and trade wars could be on the European horizon and the North could decide to secede and form its own smaller but much more vibrant and healthy trade and currency economic organization.  Let’s see how it plays out over the next decade.  The European problems will  not be solved anytime soon.   There is a limit to how much of the debts of the South the North will pay and when that is reached then scramble to re-shuffle the deck will begin.

The recent recess appointments by BO are an assault on the Constitutional relationship between the branches of government.  It goes far beyond party or ideology.  The painful and slow process of our divided government has served us well for over 200 years.  We have a President who must follow and obey the Constitution; he is not a King who rules by edict.  Where is Robert Byrd when we need him?  I didn’t even like his politics at all but I will admit he was an ardent defender of the Senate and its privileges and Constitutional powers.  He would have screamed at this action.  www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownself

A few thoughts to ponder during the Holiday Season and ideas of the inquiring mind about the current state of affairs.  Buckle up and take the ride.

Greece has been much in the news lately because of their debt problems stemming from their very generous welfare state and highly regulated economy.   They are in a death spiral at the moment and trying to right the ship, or at least so they say.  There are some of us old enough to remember a little history about how they got to this point.   After the War most of Europe made substantial progress and improved the economic situation greatly all the way into the ’70’s.   Greece, Portugal and Spain were the noticeable laggards.  Their economies were third world during the period.  The European community was formed and the free trade zone established during this period which ultimately lead to the Eurozone with the Euro currency.   Greece wanted in badly in the ’70’s but lots of Europe was skeptical but they did want the whole nine yards and all of Europe to be in the economic union.   Greece couldn’t qualify on its own merit so it was granted special subsidies to be a member.  (No one ever accused the Greeks of being bad bargainers).  It was a great deal for Greece and the rest of Europe hoped it would be a good deal down the road for everyone.   Shortly after Portugal  and Spain applied for membership having ended the authoritarian reigns of Salazar and Franco. 

They were no bargain but again “Europe” wanted everyone in the deal because it would benefit all, at least that was the belief.  Guess who raised the most objection to them?  You guessed it, the Greeks.   They were already running deficits and their economy was still lagging behind everyone else but they thought the Iberians were too much of a load to carry.  To induce the Greeks to approve the addition, the rest of Europe again granted special privileges (subsidies) to the Greeks for them to go along with the Iberian additions.   With the extra money in their pocket for doing nothing more than saying yes, the Greeks were happy to welcome them in the early ’80’s.  We all know how that has worked out.  The Eurozone with the Euro came into existence finally in the late ’90’s.  The Greeks continued to have a bloated public payroll, low productivity per worker and huge deficits.  Others are having to step in and pay off the debts for the Greeks for their profligacy and the Greeks riot in the streets about how unfairly they are being treated!   Funny, I was always taught that whoever pays the Piper gets to call the tune.

Speaking of our friends in Europe are you getting as confused as I am about the way they intend to fix their debt problems.   We have the EFSF which is the European Financial Stability Fund that was is going to get money from somewhere; they can’t seem to articulate exactly where.  Then we now have the ESM, the European Stability Mechanism which is going to add more money to the bailout pot.  New ideas seem to emerge every week.  Will the ECB (European Central Bank) simply print up new money like our Fed does for its bailouts?  There has been talk of some authority, as yet not clearly specified, that will issue bonds and then loan that money out to the needy hands.  Maybe I am just not smart enough to understand the thinking of all those European “smartest guys in the room”.  I do know it all boils down to the Germans because they are the hardest working ants in the field and the most frugal.  Can you blame them for asking what they are getting out of all this?

You all remember the story of Robin Hood.  The complaint was tha the local Sheriff of Nottingham was in cahoots with some of the local big wigs and stealing money from the public coffers.  Am I the only one who has ever wondered why Robin Hood didn’t just go after the evil Sheriff and leave the others alone.  He ended up stealing from anyone he believed was involved in wrongdoing without trial or proof and then gave the money to his preferred special interest group and built a political machine.   Had the bad Sheriff merely been replaced with another Sheriff that had another coterie of cohorts after the same bag of money?  Was he really a hero or just another wannabe dictator?

I don’t get the Payroll Tax reduction for one year.  It will add up to about $80 per average family per month for the next year.  It is like the $600 check most of us got back a few years ago and the cut we’ve had this year.  That amount spread out over a year just doesn’t motivate lots of renewed spending by consumers.  I mean look at the economy for this year.  Has that cut of 2% in the payroll tax boosted the economy this year?  A year flies by really fast.  You reach your own conclusion.  I love all lower taxes but cuts need to make sense in a broader picture.  We would all love to have that extra 80 bucks a month but that won’t cause us to go buy a pick up truck; maybe we’ll do a couple of trips to Appleby’s with the family.  

After all the sound and fury of the last year the fact is that the National Debt is higher still and going up like a rocket.  All the talk about cutting hasn’t happened yet and the so-called cuts are merely reducing the amount of the growth of the debt which is currently projected be 44 trillion in ten years.   Maybe we are just Greeks writ large.   Everyone can’t live on the Federal payroll directly or indirectly forever.  Someone has to actually work in the private sector to create real wealth and money.  The Government doesn’t create wealth, it takes wealth for allegedly the common good.   As it grows the private sector shrinks and soon there won’t be anyone to tax if we keep on the present road.

“I desire what is good; therefore, everyone who does not agree with me is a traitor”.   George III www.olcranky.wordpress.com

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